Disturbing Trade Data from China

Share prices are down 0.9% in Spain, 0.8% in France, 0.5% in Germany and 0.2% in Britain. Stocks fell by 0.7% in Hong Kong and Australia, 0.5% in China, and 1.0% in Japan.

The dollar has advanced 0.6% against the Australian dollar, which fell in response to the Reserve Bank of Australia’s quarterly Monetary Policy Report.

The dollar also has gained 0.2% against the euro, Swissie, loonie, kiwi, and sterling. The yuan is unchanged, and the yen has risen 0.2% versus the greenback.

Oil and gold prices dropped by 1.1% and 0.5% to $92.35 per barrel and $1611.90 per ounce.

Yields on ten-year British gilts and German bunds have declined by seven and six basis points. The 10-year Japanese JGB is a basis point lower, and futures point to a drop in the 10-year Treasury yield.

China reported only a 1.0% on-year increase in exports for July, down from gains of 11.3% in the year to June and 15.3% in the year to May. Import growth slowed to 4.7% from 6.3% in June and 12.7% in May. A streak of five straight improvements in the trade balance ended, as the surplus contracted to $25.1 billion from $31.7 billion in June. Exports have slowed much more abruptly than assumed, suggesting that more stimulus is badly needed.

In other released Chinese data, yuan lending went up CNY 540 billion in July, the smallest gain since September 2011 and down from a CNY 920 advance in June. M1 money growth slowed to 4.6% from 5.3% in June, but M2 growth increased to 13.9%, its fastest on-year pace so far this year.

The Reserve Bank of Australia cut projected 2012 inflation to 2.25% from 2.5% despite an increase in projected GDP growth to 3.5% from 3.0%. But the most eye-catching aspect of the quarterly Monetary Policy Report are comments about the strong Aussie dollar, which officials believe is weighing on the economy more sharply than had been expected. The exchange rate softened following this revelation.

The Bank of Japan’s monthly economic assessment reiterated what was said after yesterday’s monthly policy meeting, namely that the economy has started picking up and will continue to recover moderately.

Peru’s central bank left its interest rate benchmark unchanged again at 4.25%, where such has been since May 2011.

A lot of price and industrial production data were released today.

Japanese domestic corporate goods prices fell 0.4% on month and by 2.1% on year in July, thanks to a 5.6% plunge in oil products. On-year CGP deflation deepened from 1.4% in June. Export prices fell2.7% on year, while import prices were down by 4.8%.

British producer output prices were unchanged in July and posted a smaller 12-month increase of 1.7% after gaining 2.0% in the year to June. Core PPI-O inflation slowed to 1.3% from 1.7%. Producer input prices dropped 2.4% between July 2011 and July 2012. The core PPI-I index was down 1.5% on year.

Danish consumer prices were flat on month and up 2.3% in the year to July.

In Norway, CPI inflation eased to an infinitesimal 0.2% from 0.5% in June, and producer prices posted a 0.6% on-year decline.

Romanian CPI inflation accelerated to 3.0% in July from 2.0% in June and 1.8% in May.

Portuguese CPI inflation ticked up a tenth percentage point in July to 2.8%, exceeding expectations.

South Korean producer prices posted a fourth straight month-on-month decline in July, leading to the first on-year drop (albeit of just 0.1%) since November 2009.

French industrial production stagnated in June and recorded declines in 2Q12 of 0.6% from the first quarter and 1.9% from a year earlier.

Japanese industrial production in June was revised from a preliminary estimated 0.1% dip to a rise of 0.4%. Such followed a 3.4% plunge in May and resulted in a 2Q-over-1Q slide of 2.0%. Productive capacity and capacity usage respectively fell in June by 0.1% and 2.3%. The inventory ratio leaped 4.2%, which bodes poorly for output in coming months.

Finnish industrial production declined 1.4% on month and by 1.0% on year in June. Capacity utilization fell by 1.6 percentage points.

There were other signs of weaker-than-anticipated growth in Asian emerging markets. Real GDP in Hong Kong grew considerably more slowly last quarter than assumed. In fact such dipped 0.1% on quarter and rose just 1.1% from 2Q11. In Singapore, GDP fell 0.7% between 1Q and 2Q12 and expanded just 2.0% on year.

Canadian labor statistics will be released at 12:30 GMT. Scheduled U.S. data include the monthly budget and import prices.

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